An Acquirer is an organization licensed as a member of Visa/MasterCard as an affiliated bank or bank/processor alliance that is in the business of processing payment card transactions and contracts with merchants for Visa/MasterCard acceptance and enables card payments from customers. Acquirers charge merchants for processing payment card transactions. Processing fees typically include discount fees and transaction fees. Discount fees are normally charged as a percentage of a transaction amount. Transaction fees are normally flat fees charged per transaction, typically in addition to the discount fees, though they can be translated into a percentage and bundled into the discount rate as well.
Discount and/or transaction fees (together referred to herein as “processing fees”), vary depending upon a variety of, often proprietary, criteria associated with card categories.
Card categories can include account-related categories, such as personal accounts and business accounts, and transaction-related categories, such as in person, or “card-present”transactions, and remote, or “card-not-present” transactions. Card-not-present transactions include transactions conducted by telephone, facsimile, over the Internet or other communication network, or by mail.
Processing fees typically reflect the perceived risk or potential fraud associated with the categories. For example, card-present transactions are considered less prone to fraud, and thus less risky, than card-not-present transactions. This is due, in part, to the ability to authenticate both the user and user's possession of the payment card. Accordingly, higher processing fees are charged for card-not-present financial transactions.
What is needed are methods and systems for reducing risk associated with remote or card-not-present financial transactions.